Ron Paul Fears The Future Under Janet Yellen "Is Grim Indeed"

The news that Janet Yellen was nominated to become the next Chairman of the Board of Governors of the Federal Reserve System was greeted with joy by financial markets and the financial press. Wall Street saw Yellen's nomination as a harbinger of continued easy money. Contrast this with the hand-wringing that took place when Larry Summers' name was still in the running. Pundits worried that Summers would be too cautious, too hawkish on inflation, or too close to big banks.

The reality is that there wouldn't have been a dime's worth of difference between Yellen's and Summers' monetary policy. No matter who is at the top, the conduct of monetary policy will be largely unchanged: large-scale money printing to bail out big banks. There may be some fiddling around the edges, but any monetary policy changes will be in style only, not in substance.

Yellen, like Bernanke, Summers, and everyone else within the Fed's orbit, believes in Keynesian economics. To economists of Yellen's persuasion, the solution to recession is to stimulate spending by creating more money. Wall Street need not worry about tapering of the Fed's massive program of quantitative easing under Yellen's reign. If anything, the Fed's trillion dollars of yearly money creation may even increase.

What is obvious to most people not captured by the system is that the Fed's loose monetary policy was the root cause of the current financial crisis. Just like the Great Depression, the stagflation of the 1970s, and every other recession of the past century, the current crisis resulted from the creation of money and credit by the Federal Reserve, which led to unsustainable economic booms.

Rather than allowing the malinvestments and bad debts caused by its money creation to liquidate, the Fed continually tries to prop them up. It pumps more and more money into the system, piling debt on top of debt on top of debt. Yellen will continue along those lines, and she might even end up being Ben Bernanke on steroids.

To Yellen, the booms and bust of the business cycle are random, unforeseen events that take place just because. The possibility that the Fed itself could be responsible for the booms and busts of the business cycle would never enter her head. Nor would such thoughts cross the minds of the hundreds of economists employed by the Fed. They will continue to think the same way they have for decades, interpreting economic data and market performance through the same distorted Keynesian lens, and advocating for the same flawed policies over and over.

As a result, the American people will continue to suffer decreases in the purchasing power of the dollar and a diminished standard of living. The phony recovery we find ourselves in is only due to the Fed's easy money policies. But the Fed cannot continue to purchase trillions of dollars of assets forever. Quantitative easing must end sometime, and at that point the economy will face the prospect of rising interest rates, mountains of bad debt and malinvested resources, and a Federal Reserve which holds several trillion dollars of worthless bonds.

The future of the US economy with Chairman Yellen at the helm is grim indeed, which provides all the more reason to end our system of central economic planning by getting rid of the Federal Reserve entirely. Ripping off the bandage may hurt some in the short run, but in the long term everyone will be better off. Anyway, most of this pain will be borne by the politicians, big banks, and other special interests who profit from the current system. Ending this current system of crony capitalism and moving to sound money and free markets is the only way to return to economic prosperity and a vibrant middle class.

Actually Jimmy Carter was the last president with any sense - recall his speech about living beyond our means? Nobody wanted to hear that - no sireee - we want to live large - and we will vote for anyone who promises us that.

I doubt that they set out to accomplish any of the things you listed. Rap music culture has done more to destroy families than anything the Fed has done. It's not like people were better off in 1913 or 1971, btw. It's really all just flawed human beings with our flawed systems. I still think that as bad as the dysfunction is today, it pales in comparies to the WWI era where an entire generation of men was pretty much wiped out of existence because of misplaced chivalric/Victorian era type thinking. Progressives back then had one excuse: They did not have history's awful tragedies to act as a stern warning about such horrifying stupidity.

You need to do quite a lot of reading about the geopolitical string-pulling going on during WWI, if you think that was down to dodgy Victorian-era thinking. The Balfour Declaration is a smoking-gun, and how it came about explains much of what went on, especially toward the middle and end of WWI, and the US's involvement.

During the first meeting between Weizmann and Balfour in 1906, Balfour asked what Weizmann's objections were to the idea of a Jewish homeland in Uganda, (the Uganda Protectorate in East Africa in the British Uganda Programme), rather than in Palestine. According to Weizmann's memoir, the conversation went as follows:

"Mr. Balfour, supposing I was to offer you Paris instead of London, would you take it?" He sat up, looked at me, and answered: "But Dr. Weizmann, we have London." "That is true," I said, "but we had Jerusalem when London was a marsh." He ... said two things which I remember vividly. The first was: "Are there many Jews who think like you?" I answered: "I believe I speak the mind of millions of Jews whom you will never see and who cannot speak for themselves." ... To this he said: "If that is so you will one day be a force."[6]

Two months after Britain's declaration of war on the Ottoman Empire in November 1914, Zionist British cabinet member Herbert Samuel circulated a memorandum entitledThe Future of Palestine to his cabinet colleagues. The memorandum stated that "I am assured that the solution of the problem of Palestine which would be much the most welcome to the leaders and supporters of the Zionist movement throughout the world would be the annexation of the country to the British Empire".

So that's what they did, largely colonial force cannon-fodder under British command took Palestine off the Turkish Empire, who handed it to the zionists. It's been endless wars and terrorism ever since.

Excellent video! Thanks for including it. so, if the 'money' creation stops there can be no more debt creation, and no more money created to pay the interest on the existing debt (bonds). That's how we get to default. So be it.

It's time to force real money back into the system per the constitution!

It's known as starting over . . . .

All the people with no money won't lose anything. . . just food stamps. That will have to be replaced by charity! (Depression days . . .)

Those who have money will have to be allowed to exchange it for a new PM backed currency. (Hopefully the gold is still in Fort Knox and or in New York.

Those who have PMs will be able to exchange them (or not) for any new PM backed currency.

Space navy sounds cool, though. I know a bunch of people are already signed up for a one way ticket to Mars. Surely, infinite sustainable growth is waiting for us among the stars. Can you imagine how cool slaughtering space Indians is going to be?!

He's totally correct but what happens to all the debt owed and coming due. There needs to be a restructuring or much inflation to work us out of this trap. The later will be easier to swallow and the FED will do whatever it takes to start runaway inflation. They will keep rates low as long as possible to complete the transfer of wealth from the 99%.

Ron ... if you're out there I would love to know what you think of the job of the current president and the likely hood of an economic depression. I'd love to see you talk about it in a subsequent column and not here.

That seems grossly optimistic to me. I think the situation is more like the scene in the novel Catch 22, where first aid is being applied to a visible thigh wound, while there is an already fatal wound in the back, that is not being seen.

The body politic is going to bleed to death, whether or not the superficial bandages are ripped off. The established systems are already more than 99% crazy and corrupted to the point where they are too sick to save themselves anymore.

Nothing much will change until these idiots at the Fed, Congress, and the President crash the US$.

The real fear I have is that when the currency does crash, and the US$ takes a huge sudden hit in purchasing power, the response will befascistin nature. Goodbye Free Markets... assuming any markets will still be "free" when the "crackup-boom" occurs.